Johannesburg - Omnia Holdings, which provides specialised chemicals, says profit for the first half dropped 22.1 percent to R259 million as the drought and commodity rout took their toll.

The listed company says, in the 6 months to September, revenue gained 2.5 percent to R7.9 billion, but its operating margins lost 1.1 percent to 5.8 percent and headline earnings per share declined 24.9 percent to 371c.

The company explains gross profit decreased by 11 percent to R1.519 billion due to lower gross margins in the agriculture and mining division, offset marginally by the higher gross margin in the chemicals division.

Headline earnings are seen as a core indicator of a company’s profit as this measure strips out unusual and once-off items that are not core.

Omnia, which supplies the agriculture, mining and chemical sectors, has a presence in 23 countries, while its operations extend into 18 countries in Africa, including South Africa with focused operations also in Australasia, Brazil and China.

However, it notes that the global economy remained volatile in the first half of the financial year, with the Brexit vote in the UK being concluded and the uncertainty associated with the run up to the US elections in November. The OPEC producing countries that reached agreement in September to cut production had little to no positive impact on oil prices, it adds.

Omnia adds the “changing landscape of the political situation in South Africa was characterised by several key events aimed directly at the incumbent president and corruption. The prospect of a downgrade of the foreign denominated South African government bonds weighed on the outlook for the country for most of 2016.”

It also notes the rand staged a strong comeback against all major currencies during the first half of the financial year including the US dollar.

It adds the El Niño, which led to the worst drought in SA for more than a century, has eased, and commodity prices are improving.

Despite the challenging period, Omnia declared a cash dividend of 160 cents per ordinary share. down from 180c last year.

IOL